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In May 2017 The BLS estimates the following data related to the labor market. No. of employed = 230 million. No. of individuals in part-time employment = 32 million. No. of unemployed (and actively seeking jobs)= 20 million. No. of discouraged workers = 3.5 million.
(a) Calculate the size of the labor force and the unemployment rate using the current practice of BLS.
(b) Now suppose that in order to refine its method of accurately calculating the extent of unemployment, BLS institutes the following changes in its calculation of unemployment rate: it begins to count discouraged workers as unemployed; it also estimates that typically 25% of part-time workers are working part-time involuntarily (due to lack of full time jobs). It begins to count these part-time workers as unemployed. Using these changes re-calculate the size of the labor force and the unemployment rate of January 2017.
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